Duluth/Lawrenceville/Johns Creek CPA: Is a Limited Liability Company the Right Entity Selection for Your Business?

Duluth/Lawrenceville/Johns Creek CPA: Is a Limited Liability Company the Right Entity Selection for Your Business?

Want to Know if Your LLC Should Convert to an S Corporation for Tax Purposes?

Do You Need a CPA to Help You Through the Maze of Tax Law?

As a Christian Faith Based CPA firm, we seek to serve you the way God would, if He was a CPA. The below is a sample letter we might use to send to a client to help them with important tax issues for their newly incorporated business:

It was great to meet you today.

Below is some information on the issues of converting your LLC to an S Corporation for tax purposes.

If you would like to go forward with this please send along a copy of your incorporation papers and your last filed personal return and I will get it completed.

I look forward to serving as your CPA for many years to come.

LLC's can Legally Convert to an S Corporation

Legal Liability Companies came in vogue approximately twenty years ago when the state of Georgia enacted legislation allowing an LLC (Limited Liability Company) to be established. Although the LLC does allow for some greater flexibility and ease of operation it often results in a higher tax obligation that might not have been incurred if the business was an S Corporation.

The IRS treats all the earned income from an LLC as being subject to both FICA & Medicaid taxes whereas an S Corporation has to pay those taxes reflected on W-2's. For tax purposes, the law allows an S Corporation to legally convert to being an S Corporation as long as all active employee/owners pay themselves a fair and reasonable salary. This number is best determined by the facts, position, and profit of a business and the truest test of this calculation is what a business owner would have to pay someone else to perform their position.

Each and every business is unique and therefore all saving opportunities are different. But even the smallest of businesses with the smallest of profits may save several thousand dollars by converting from an LLC to an S Corporation.

There are only four rules to qualify for being an S Corporation. You must:

-Have a December 31st year-end.

-Have less than 100 shareholders.

-Have shareholders who are U.S. citizens or resident aliens.

-Have only one class of stock.

We offer a free initial consultation to see if converting your business to an S Corporation for tax purposes makes sense to you. Put our decades of experience to work for you ensuring you pay your lowest legal possible tax.